NV Energy to pay city of Reno $450,000 to stay as a customer, with room to back out

The Reno City Council approved a five-year agreement with NV Energy that prevents it from leaving the utility in exchange for a $450,000 payment from the state’s largest power provider. 

Although the council unanimously approved the contract Wednesday at its last meeting before the new year, several council members expressed an interest in revisiting the issue in January. 

NV Energy will pay the city of Reno an upfront payment of $450,000, in accordance with an agreement that the city negotiated with the utility. Throughout the year, NV Energy has entered into agreements with large municipal customers and governmental agencies across the state.

Most recently, the Nevada System of Higher Education (NSHE) signed an agreement with the utility to receive $500,000 in annual payments over three years, with the possibility of future payments after “good faith” negotiations over the utility’s optional pricing program rate for large customers. 

The contracts help the utility retain large customers, which can leave the regulated monopoly through a provision in law that was created in response to the Western energy crisis. Over the past several years, businesses and government agencies have applied with the Public Utilities Commission of Nevada to leave the utility under the provision. As a result, NV Energy has used the incentive payments to keep large government agencies as customers. 

The Reno contract marks the sixth agreement this year. In addition to the deal with NSHE, NV Energy signed contracts with Clark County ($1.1 million per year), the City of Henderson ($250,000), the Clark County School District ($1.5 million) and the Las Vegas Convention and Visitors Authority ($650,000). 

But the city of Reno could still exit the contract. The contract includes a termination clause that would require the city to return the $450,000 payment within 30 days of the termination.

Reno Mayor Hillary Schieve said she wanted to make sure the agreement aligned with the city’s sustainability plan, and the council had yet to fully discuss the topic. Although the council approved the incentive payment because NV Energy said the program could end in 2020, it plans to continue discussing whether it wants to stay with the utility over the next five years.